- September 1, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Subject – Economy
Context – Overseas settlement of G-sec deals on anvil: Das.
- Government securities are debt instruments of a sovereign government.
- They sell these products to finance day-to-day governmental operations and provide funding for special infrastructure and military projects.
- These investments work in much the same way as a corporate debt issue.
- By issuing debt, governments can avoid hiking taxes or cutting other areas of spending in the budget each time they need additional funds for a project.
- It generally includes a commitment to pay periodic interest, called coupon payments, and to repay the face value on the maturity date.
- Government bonds can be denominated in a foreign currency or the government’s domestic currency.
- When a government is close to default on its debt, the media often refer to this as a sovereign debt crisis.